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EU plans sanctions if partner countries breach labour and sustainability rules

The EU is set to propose new rules this week that would allow it to impose trade sanctions on countries that have violated labor rights and climate change terms in bilateral agreements with the bloc.

Valdis Dombrovskis, EU Trade Commissioner, said in an interview that he wanted to “put sustainability at the heart of trade policy” by enforcing the trade and sustainable development (TSD) clauses in the offers.

The move comes days after the World Trade Organization signed its first sustainability and trade agreement, limiting subsidies for vessels fishing in unregulated international waters and for overfished stocks.

Dombrovskis said the fisheries agreement marked “a real turning point” after 21 years of negotiations. “Sustainability has grown from an afterthought to a central stage when it comes to global trade. It shows that the global community is now more willing to address these issues.”

The EU has included TSDs in all trade agreements since 2009, but has rarely used them to force trading partners to change their domestic policies. “We will set out our new approach to sustainable development chapters in our bilateral trade agreements, including by stepping up the enforcement and implementation of sustainability commitments,” Dombrovskis said.

The new rules, to be formally approved by the European Commission on Wednesday, are likely to gain wide acceptance among member states and in the European Parliament, which must approve them.

They will include stricter enforcement of TSDs in new trade deals and the ability to impose sanctions, such as tariffs, if countries violate “core provisions,” according to people briefed about the plan. Those core provisions meet the standards of the International Labor Organization and the Paris Agreement to reduce carbon emissions, the people said.

The EU has found it increasingly difficult to ratify trade agreements in all 27 Member States without allaying concerns that they will lead to environmental destruction or labor abuse if partners increase production to meet EU demand.

Brussels has signed a deal with South American trading bloc Mercosur, which includes Brazil and Argentina, but several EU countries have refused to ratify it until Brazil signs a side letter promising to protect the Amazon rainforest.

“If we want to conclude more bilateral trade agreements . † † we need to strengthen our sustainability commitments,” said Dombrovskis.

However, both parties to a trade agreement would have to agree to the EU terms. The first major challenge could come in talks with India, known as a tough negotiator, which reopened Friday after ten years.

At last week’s WTO meeting, Indian trade minister Piyush Goyal refused to cut most fisheries subsidies in inland waters.

A proposed deal with New Zealand is largely in place and would not be compromised.

Dombrovskis said the WTO ministerial conference in Geneva last week had “put multilateralism back on track”.

In addition to a plan to make it easier for poorer countries to make cheap copies of Covid vaccines, trade ministers agreed to cut restrictions on food exports to address global food shortages. They also temporarily extended the duty-free trade in digital products such as films, computer software and data,

“When the world faces a host of acute challenges, stronger and better global rules are more important than ever,” the trade commissioner said.

The EU is increasingly using its strength as the world’s largest trader to change policies in developing countries. Earlier this year, it proposed imposing tariffs on countries that block the return of deported migrants.

But the EU’s use of trade to export its values ​​worldwide has met with resistance. Brazil’s populist president, Jair Bolsonaro, told Berlin in 2019: “Reforest Germany” when it said he failed to protect the Amazon.

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